Pension Schemes Bill

Vikki Slade Excerpts

Wednesday 3rd December 2025 Commons Chamber

To conclude, I really support the Bill and its aims. The Cornwall pension fund benefited from its initial consolidation into the pool by being able to invest in local infrastructure, and we made responsible investment one of our top priorities; I believe that has continued since I stepped down as chair. There are issues to do with consolidation and growth that I would like the Minister to look at, and I look forward to hearing his response.

[Vikki Slade (Mid Dorset and North Poole) (LD)]

I welcome the overall thrust of the Bill. Measures such as the pension pot consolidations are long overdue and will make a real difference to savers, particularly small savers. Every new year, I try to tidy up the numerous tiny pensions from jobs I had in my 20s and 30s, but the pots are so small that the cost of a financial planner and the exit fees would wipe them out, so this reform is great news for consumers who have been on low incomes and have moved from job to job. I urge the Government to go further by lifting the threshold. After all, a pension pot of £10,000 will generate a payback of only around £50 a month, which is barely enough to cover a basic weekly shop. The Bill goes in the right direction, but it does not go far enough or move fast enough. I am concerned that it leaves groups of pensioners who did the right thing by saving for the future considerably out of pocket.

Like others in the Chamber, I welcome the long-overdue decision to provide some indexation for pre-1997 pensions in the PPF and FAS, but let us be clear: this is not full justice. These pensioners have endured decades without inflation protection, and a CPI increase capped at 2.5% starting in two years’ time, at a time when the cost of living has soared, is still going to leave people struggling. They expected fairness and parity with post-1997 benefits, but what they have received is a compromise that falls short of restoring their full dignity and security in retirement. I call on Ministers to support the calls of many people, including the hon. Member for Llanelli (Dame Nia Griffith), to ensure that pensioners outside the PPF and the FAS are fully supported.

The case of AEA Technology pensioners is a long-running injustice that I have been dealing with since my first days in this place. Employees, who were often nuclear scientists and safety engineers, were promised pensions “no less favourable” than the civil service scheme, and many worked at the Winfrith atomic energy establishment, just outside my constituency in Dorset. I have met and talked to a number of them, including Peter, Phil, Sally and Michael, as well as Jonathan, who wrote to me saying that

“nearly 20% of AEAT pensioners have died since the campaign started in 2012, including my colleague and campaigner Derek Whitmell. This has echoes of the Post Office and infected blood scandals. Delay by the Government is simply unacceptable…this is now in sharp focus for me with Derek’s passing”.

Those pensioners trusted the promise that the Government gave them at the time, yet after AEAT collapsed, their pensions were cut by almost half, with inflation protection stripped away. Today, the fund holds far in excess of what is needed to restore their pensions in full, yet thousands of them remain short-changed.

I recognise the changes in the pre-1997 pensions announced last week, but they are woefully inadequate. That is not just unfair; it is a breach of trust. New clause 1, tabled by my hon. Friend the Member for Didcot and Wantage (Olly Glover), calls for an independent review so that we can finally deliver justice for those pensioners, just as the Government have started to deliver justice on many other historical scandals, which I welcome. This is one of those scandals.

I turn to another. While the Government’s intention to allow surplus sharing of defined benefit schemes is welcome, the Bill as drafted leaves pensioners exposed. UK DB schemes hold an estimated £222 billion in surplus, yet 88% of those funds have failed to use those surpluses to restore pensions eroded by inflation. Companies such as BP transfer the assets to insurers in bulk annuity deals worth £50 billion annually, while pensioners see their living standards fall.

My amendments 17, 18 and 19 seek to put fairness at the heart of the process. Amendment 17 would ensure that surplus sharing principles applied even when schemes were wound up. Amendment 18 would require consultation with members before the surplus was extracted, and amendment 19 would reinstate trustee consent and oblige trustees to consider whether pensions had kept pace with inflation and past requests for discretionary increases.

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

I have several BP pensioners, with BP obviously having operated the Sullom Voe terminal in Shetland for many years. The injustice they suffered, which left them with a pension worth about 11% less than it should have been because of the decisions of the trustee in 2021 and 2022, showed the inadequacy of the control and independence of the trustee in relation to the company. Does my hon. Friend agree that that requires urgent attention?

[Vikki Slade]

I thank my right hon. Friend for his intervention—he has stolen my next line.

John, who works at the BP depot at Wytch Farm, which is the largest onshore oil site in England in Poole harbour, told me that his pension has been eroded by 11%—he probably got the same letter as my right hon. Friend’s constituents. Even modest requests for discretionary increases made by the trustees have been refused by the parent company. Those discretionary increases were affordable; they would not have required any additional funds from the company. Another of my constituents, Suzie, who sits on the steering group, told me that the issue affects 56,000 pensioners from BP alone, but the change—a small one—would support pensioners from many other companies.

I will end by talking to new clause 3, tabled by my hon. Friend the Member for Stratford-on-Avon (Manuela Perteghella). I do so in memory of my mum Lin Foster, who died before she could access her pensions, and in support of my constituent Judith, who came to see me about her sister Alison, who died after receiving a terminal brain tumour diagnosis. Alison found that the paperwork required to access her lump sum meant that she would have to articulate and confront her impending death—something that she simply could not do on top of everything else. It meant that, as a result, she missed out on funds that could have made her last few months more bearable, as well as on potentially accessing treatments that might have given her a bit more time with her family. This simple clause would have allowed her medical team to make that declaration on her behalf via an SR1 and to reduce the administration for all concerned.

The Bill goes a long way in improving the lives of pensioners, but for the pensioners who are missing out, small changes could make a huge difference. I urge Ministers to think about the impact they could have on lives by little tweaks that will not cost the Government anything, or very much, at all.

[Peter Swallow]

Can I say at the outset how much I have enjoyed the debate? I particularly want to highlight the contributions of my hon. Friend the Member for Llanelli (Dame Nia Griffith), who powerfully raised some of the issues that I will go on to address, and—purely because I enjoyed the fiscal geekery—the contribution from the hon. Member for Aberdeen North (Kirsty Blackman), who rivals the Minister himself in her enthusiasm for financial issues. What a delight it was to experience that.

I welcome the opportunity to speak on this Bill, which touches on several issues close to my constituents in Bracknell Forest. It is also worth acknowledging the strong action that the Chancellor took in the Budget to support all pensioners by raising the state pension by up to £550. That is possible only thanks to Labour’s steadfast commitment to the triple lock on pensions. That is real action on pensioner poverty, at a time when the Conservatives and Reform have flirted with scrapping the triple lock.

Similarly, the Bill delivers real benefits to private pension savers across the country by simplifying and streamlining the system. The measures will increase their returns—around 3,300,000 workers on defined contribution schemes in the south-east alone stand to benefit by about £29,000 more for their retirement—while helping to unlock around £50 billion of investment in the UK economy. Hon. Members need only follow the Minister on Twitter to see why it is so important that we increase investment in the UK economy after many years of under-investment by the previous Government.

I thank the Minister for the work to get the Bill to this stage. I welcome in particular the measures providing for action on an issue close to the hearts of many in Bracknell Forest: the slow erosion of pre-1997 defined benefit pensions. It is for that reason that I will focus on new clause 22, which calls for the indexation of pre-1997 pensions. I sympathise deeply with the spirit of the new clause. The erosion of those pensions is an injustice—one that urgently needs addressing. It is important to say that not all pre-1997 schemes are in surplus. Although I agree that that is not the fault of their members, legislating to index would put entire schemes at risk, and I believe that that is not a risk that any sensible Government would take. However, it is vital that the Bill marks the beginning of further action to bring justice to those with pre-1997 defined benefit pensions whose schemes are now in generous surplus.

I was delighted when the Chancellor announced at the Budget statement that members of the Pension Protection Fund will have their accruals protected from inflation, ending years of degradation. That has been carried through in amendments before us. I welcome the recognition in principle that those with pre-1997 pensions are indeed facing an injustice, and that action must be taken to rectify it. I have met many constituents who were formerly employed by HP and later HPE, which used to be based in Bracknell. They are now members of the HPE pension scheme, and have seen their returns decimated. I have spoken with other pensioners in other schemes, too—many of which have been mentioned by others Members across the House. It is not right that people who have worked hard and paid into their pensions now face ever-diminishing life savings through no fault of their own, despite many schemes, including HPE, having significant reserves.

One of my constituents, Ed, began drawing from his pension nine years ago. In that time, his pension has increased only three times, by three separate percentage increments: 3%, 1%, and 1%. He says that, had his pension risen in line with inflation, he would have seen his pension increase by around 38% over the years to 2025. As a result—this is the real-life impact—he has seen a dramatic fall in his living standards. Ed is not alone. Constituents in Bracknell and across the country should not have to fight any more to make themselves heard and achieve justice.

This is an opportune moment to do what we can to put that right. In the Bill, the Government are reforming the use of surpluses, rightly strengthening the hands of trustees to act, as the Government themselves have done for the PPF scheme, for which they effectively act as the trustee—they are leading by example. I thank the Chancellor and the Pensions Minister for meeting me to discuss that before the Budget. The Minister has been clear on his expectations of trustees following the passage of the Bill, including in his contribution today, and I thank him for his comments, specifically on strengthening guidance for trustees.

Today must be the beginning, not the end, of the story. I have written to the trustees of the HPE scheme urging them to use the powers in this Bill to right the wrong.

I wanted to take this opportunity to call once more on the trustees of the HPE scheme, and other schemes similarly in surplus, to do everything in their power to ensure that pre-1997 pensions are protected from inflation, and I wanted to do so on the Floor of this House because I think it important that we are as clear as possible that trustees will be given the powers they need to act and should follow through with concrete action to protect pensions. That is the right thing to do, and with the powers the Government are granting in the Bill, it is now in their hands to do it.